Bulls And Bears

US-China trade deal sends STI up 0.65%

Most Asia markets also advance, with Australian index hitting all-time high

Local shares made the most of the phase one trade agreement signed by the United States and China on Wednesday and headed higher yesterday in tandem with most Asian markets.

The optimistic mood allowed the Straits Times Index (STI) to post steady gains throughout the day before closing up 0.65 per cent, or 21.02 points, to 3,278.

Volumes hit 1.41 billion shares worth $1.36 billion, with gainers outnumbering losers 242 to 174.

Australia's S&P/ASX 200 index was one of the standouts, jumping 0.7 per cent to a new all-time high.

South Korea's Kospi was bullish as well, closing 0.8 per cent higher, Hong Kong ticked up 0.4 per cent and the Nikkei 225 index in Tokyo crept up 0.07 per cent.

Chinese markets were the clear exception, with Shanghai and Shenzhen bourses falling.

Chinese investors may see the phase one trade agreement as having limited positive impact for their economy.

It leaves in place nearly all of the existing tariffs and outlines substantial purchasing targets that China will have to meet, while skirting numerous other issues between the two countries.

However, it does include some items that could affect the market in the near to medium term, such as pledges by China to avoid manipulating its currency and to remove barriers to its financial services market for US companies, noted IG Markets analyst Pan Jingyi.

 
 
 

Yangzijiang Shipbuilding was the top traded counter here, falling 0.86 per cent to $1.15 with 60.4 million shares changing hands.

It was one of eight STI counters that finished in the red yesterday.

Singtel led the remaining STI constituents to end higher, continuing its climb from Wednesday's session. It closed up 2.15 per cent to $3.33.

Along with NetLink NBN Trust, the telco was a top pick for DBS in a report on the Asean telecommunications sector yesterday.

DBS analysts noted that Singtel is attractive at a 24 per cent holding company discount, compared with a 14 per cent historic average, and this could narrow with the turnaround of its associated company Bharti Airtel.

OCBC Bank was another heavily traded stock, gaining 1.18 per cent to $11.11 on a volume of 12.5 million.

The bank's shares have room for further upside, with Singapore Exchange market strategist Geoff Howie noting: "OCBC is currently trading near three-year lows on a price-to-book basis, yet at the same time maintains a 4.3 per cent dividend yield that is up from 3.8 per cent three years ago."

A version of this article appeared in the print edition of The Straits Times on January 17, 2020, with the headline 'US-China trade deal sends STI up 0.65%'. Subscribe